Buyout Calculator

Teams can buyout a player in order to reduce their short-term cap hit by spreading it over a longer period of time. Depending on the player’s structure, age, and when the player is bought out, the buyout ratio will vary. More information can be found on the Buyout FAQ page.

Teams are able to rid themselves of an albatross contract by using a buyout. In these situations, players are given the money owed to them over the contract over a longer period of time, and, most importantly for the team, the cap hit is shrug and spread out over a longer period of time.

The buyout amount is a function of the players age at the time of the buyout. If the player is younger than 26 at the time of the buyout it is 1/3 of the remaining contract value and if the player is 26 or older at the time of the buyout it is 2/3 of the remaining contract value. The buyout is spread out over a period of twice the remaining length of the contract. The cap hit is calculated by multiplying the remaining salary (excluding signing bonuses) by the buyout amount (as determined by age) for the total buyout cost and spreading the total buyout cost evenly over twice the remaining contract years.

Before being bought out, players must be placed on unconditional waivers. If a player is claimed, they become property of the claiming team. If not, the buyout process can begin. If a player has a no-movement clause in their contract, they can resist going on unconditional waivers, and, thus, they can essentially stop themselves from being bought out.

Another interesting caveat around buyouts are the existent of buyout proof contracts. While no contract is technically buyout proof, many contracts that have been signed in recent years are structured in a way to make it virtually impossible for teams to get savings on the buyout.

Earlier, I mentioned the cap hit is calculated by multiplying the remaining salary excluding signing bonuses. That means contracts which are signing bonus heavy are effectively buyout proof. If you have a player like Connor McDavid, for example, whose contract is largely signing bonus, the Edmonton Oilers don’t get much of a cap savings by buying him out.

If they, for some reason, were to buy McDavid out after the 2018-19 season, he has $12 million in base salary remaining and $73 million in signing bonus remaining in his contract. As a result, the team would still end up being charged a cap hit barely below the $12.5 million cap hit they’re currently being charged now.

After the 2012 NHL lockout, teams were given two compliance buyouts, which were different than regular buyouts. With these, teams were able to get rid of a player by paying two-thirds of the remaining value of a contract over twice the remaining length of the contract without being charged a cap hit. As a result, many players were bought out, such as Scott Gomez, Rick DiPietro, Wade Redden, Ilya Bryzgalov, and Vincent Lecavalier, all of whom owned infamously bad contracts.

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